Remember that so-called disconnect between commercial property values and fundamentals? If 2005 was any indication, it may soon be forgotten. Sales transactions for commercial real estate buildings reached an eye-popping $270 billion last year, according to Real Capital Analytics, which tracks deals $5 million and higher. That's a whopping 46% increase over the level of sales activity posted in 2004.
At the same time, leasing activity across all the major property sectors improved. The national office vacancy rate, for example, dropped from 16.8% at the end of 2004 to 14.6% at the close of 2005. The uptick in leasing activity marked a significant departure from 2004, when sales transactions almost exclusively pumped up brokerage revenues.
This sales and leasing momentum helped the nation's top real estate brokerages post another banner year. In fact, the combined total dollar volume of sales and leasing transactions recorded by the top five brokerage firms increased from $284.8 billion in 2004 to $351.3 billion in 2005, a 23% jump, according to NREI's Top Brokerage Survey.
No change in the top spot
Once again, CB Richard Ellis captured the No. 1 ranking in this year's brokerage survey. Specifically, CBRE recorded $150.4 billion in total investment sales and leasing volume during 2005, an increase of 18% over the $127.4 billion figure notched in 2004.
CB Richard Ellis wasn't alone in boosting its performance rather dramatically between 2004 and 2005. Cushman & Wakefield — No. 2 in NREI's survey — raised its total from $52.3 billion to $69.3 billion year-over-year, a 32% increase.
According to CEO Bruce Mosler, roughly one-quarter of the firm's 2005 investment sales were tied to multifamily transactions. By comparison, says Mosler, multifamily sales represented just 17% of investment sales in 2004.
The survey rankings reveal some surprise shifts. One example: fresh off a merger with Knight Frank of London, brokerage Newmark Knight Frank of Manhattan jumped from the 14th spot to No. 4. Newmark Knight Frank recorded a combined sales and leasing volume of $41 billion in 2005. Newmark Knight Frank's climb up the rankings ladder bumped Grubb & Ellis from No. 4 to No. 5.
Leasing at last
The leasing markets did more than just improve in 2005. “They also helped drive demand for investment properties as fundamentals got even better during the year,” says Bob Bach, director of national research at Grubb & Ellis, which recorded $40 billion in combined sales and leasing transactions for the year.
Roughly 2 million non-farm payroll jobs were created during 2005, many in the office sector, which helped tighten vacancy rates in many property segments. By comparison, just 1.4 million new jobs were created in 2004.
While office vacancy posted the sharpest decline year-over-year, both industrial and multifamily markets tightened moderately. The national industrial vacancy rate closed 2005 at 8.1%, or 1.3% below its year-end 2004 level. One major factor was overflowing port traffic into West Coast shipping hubs, which helped drive demand for both warehouse and distribution space across the nation.
A different set of forces helped the apartment market post a strong year. First, a wave of condo conversion activity helped knock vacancy down from 6.7% to 5.7% in 2005. Roughly 34% of the $87 billion in apartment properties that sold last year were bought by condo converters. Job growth and net immigration helped tighten vacancy in markets such as New York, Los Angeles and Miami.
Parke M. Chapman is NREI's senior editor
| Rank | Building | Market | Price | Cap Rate (%) | Buyer |
|---|---|---|---|---|---|
| 1 | MetLife Building (200 Park Avenue) | Manhattan | $1.72 billion | 4.5 | Tishman Speyer |
| 2 | Bank of America Center | San Francisco | $1.05 billion | 6.3 | Hudson Waterfront Associates |
| 3 | One Madison Ave. | Manhattan | $801.6 million | 5.9 | SL Green Realty Corp. |
| Source: Real Capital Analytics | |||||
| Rank | Building | Market | Lease/sq.ft. | Tenant | Tenant Rep |
|---|---|---|---|---|---|
| 1 | 4545 Fisher Road | Columbus, Ohio | 2.05 million | Steve & Barry's University Sportswear | Ohio Realty Advisors |
| 2 | 8301 Industrial Blvd | Philadelphia | 1.02 million | Wakefern Food Corp. | Liberty Property Trust |
| 3 | 5330 Crosswinds Dr. | Columbus, Ohio | 1.01 million | Genco Sears | n/a |
| *The top three leasing deals of 2005 are all industrial properties. | |||||
| Source: CoStar Group | |||||
TOP 25 BROKERAGES
The Top 25 Brokerages listing is based on responses to NREI's Top Brokerage survey, which was conducted via e-mail in February and March 2006. Brokers were asked to provide the total dollar value of leasing transactions and investment sales during 2005. The totals were combined to determine the company's ranking. NREI makes every attempt to ensure the final survey is as comprehensive as possible, but some brokerages may choose not to participate.
- CB Richard Ellis
Total Amount of Investment Sales & Leasing Transactions: $150.4 billion
100 N. Sepulveda Blvd., Suite 1050
El Segundo, CA 90245Phone: (310) 606-4700
Email: [email protected]
Web site: www.cbre.com
Brett White, President/CEO; Kenneth J. Kay, CFO; Calvin W. Frese, Jr., President, Americas
- Cushman & Wakefield
Total Amount of Investment Sales & Leasing Transactions: $69.3 billion
51 W. 52nd St.
New York, NY 10019Phone: (212) 841-7932
Web site: www.cushwake.com
Bruce Mosler, President/CEO; John Cushman, Chairman; John Santora, COO
- Colliers International
Total Amount of Investment Sales & Leasing Transactions: $50.6 billion
50 Milk St.
Boston, MA 2109Phone: (617) 722-0221
Email: [email protected]
Web site: www.colliers.com
Margaret Wigglesworth, President/CEO; David Kahnweiler, Chairman; Richard Kimball, EVP
- Newmark Knight Frank
Total Amount of Investment Sales & Leasing Transactions: $41 billion
125 Park Ave.
New York, NY 10017Phone: (212) 372-2000
Web site: www.newmarkkf.com
Jeffrey R. Gural, Chairman; Barry M. Gosin, CEO; James D. Kuhn, President
- Grubb & Ellis Co.
Total Amount of Investment Sales & Leasing Transactions: $40 billion
2215 Sanders Rd.
Northbrook, IL 60062Phone: (847) 753-7500
Email: [email protected]
Web site: www.grubb-ellis.com
Mark Rose, CEO; Maureen Ehrenberg, President, Global Client Services; Robert Osbrink, President, Transaction Services
- Jones Lang LaSalle
Total Amount of Investment Sales & Leasing Transactions: $35.8 billion
200 E. Randolph Dr.
Chicago, IL 60601Phone: (312) 782-5800
Web site: www.joneslanglasalle.com
Colin Dyer, President/CEO; Lauralee Martin, COO/CFO; Peter Roberts, CEO, Americas
- NAI Global
Total Amount of Investment Sales & Leasing Transactions: $35 billion
4 Independence Way, Suite 400
Princeton, NJ 08540Phone: (609) 945-4000
Email: [email protected]
Web site: www.naiglobal.com
Gerald Finn, Chairman/CEO; Jeffrey Finn, President/COO; David Blanchard, EVP
- ONCOR International
Total Amount of Investment Sales & Leasing Transactions: $27.8 billion
350 N. LaSalle, Suite 710
Chicago, IL 60610Phone: (312) 527-4455
Email: [email protected]
Web site: www.oncorintl.com
Charles Seufferlein, Chairman; Robert Peterson, Vice Chairman; David Matthes, President/CEO
- The CORE Network
Total Amount of Investment Sales & Leasing Transactions: $25.4 billion
15150 Preston Rd., #300
Dallas, TX 75248Phone: (972) 980-3994
Email: [email protected]
Web site: www.corenetwork.org
Perry S. Morita, Executive Director; Edward A. Cross II, Chairman of the Board; F. Keene Miller, Vice Chairman of the Board
- GVA Worldwide
Total Amount of Investment Sales & Leasing Transactions: $22 billion
2569 Sherman Ave., Suite 201C
Evanston, IL 60201Phone: (847) 733-0883
Email: [email protected]
Web site: www.gvaworldwide.com
Michael T. Cohen, Chairman; Michael Corbett, Vice Chairman; Betsy Baer, COO
- Trammell Crow Co.
Total Amount of Investment Sales & Leasing Transactions: $21.5 billion
2001 Ross Ave., Suite 3400
Dallas, TX 75201Phone: (214) 863-3000
Email: [email protected]
Web site: www.trammellcrow.com
Robert E. Sulentic, Chairman/CEO; Bob Shibuya, Executive Director, National Brokerage Services; Jack Minter, National Director, Capital Markets
- Studley
Total Amount of Investment Sales & Leasing Transactions: $21.07 billion
300 Park Ave., 3rd Floor
New York, NY 10022Phone: (212) 326-1000
Web site: www.studley.com
Mitchell S. Steir, Chairman/CEO; Michael Colacino, President
- The Staubach Co.
Total Amount of Investment Sales & Leasing Transactions: $21 billion
15601 Dallas Pkwy., Suite 400
Addison, TX 75001Phone: (972) 361-5000
Web site: www.staubach.com
Roger Staubach, Chairman/CEO; Elysia Ragusa, President/COO
- Marcus & Millichap
Total Amount of Investment Sales & Leasing Transactions: $20.9 billion
16830 Ventura Blvd., Suite 352
Encino, CA 91436Phone: (818) 907-0600
Email: [email protected]
Web site: www.marcusmillichap.com
George M. Marcus, Chairman; William A. Millichap, Chairman; Harvey E. Green, President/CEO
- CORFAC International — Corporate Facility Advisors
Total Amount of Investment Sales & Leasing Transactions: $16.9 billion
2000 N. 15th St.
Arlington, VA 22201Phone: (703) 528-3500
Email: [email protected]
Web site: www.corfac.com
David Bruce, President; John Bitzer, VP; Thomas P. Bennett, Executive Director
- Coldwell Banker Commercial Affiliates Inc.
Total Amount of Investment Sales & Leasing Transactions: $14.3 billion
1 Campus Dr.
Parsippany, NJ 07054Phone: (800) 222-2162
Email: [email protected]
Web site: www.coldwellbankercommercial.com
Jacklene Chesler, SVP, Marketing; Frederick Schmidt, SVP, Business Development; Nancy Brown, VP, Servicing, Operations, Education & Learning
- TCN Worldwide
Total Amount of Investment Sales & Leasing Transactions: $11.6 billion
2419 Coit Rd., Suite A
Plano, TX 75075Phone: (972) 769-8701
Web site: www.tcnworldwide.com
Ross Ford, President/CEO; Neil Siderow, Chairman; David Wagner, Vice Chairman
- Sperry Van Ness
Total Amount of Investment Sales & Leasing Transactions: $10 billion
18881 Von Karman Ave., Suite 800
Irvine, CA 92612Phone: (949) 250-4100
Web site: www.svn.com
David Frosh, President; Rand Sperry, Co-Founder; Mark Van Ness, Co-Founder
- HFF (Holliday Fenoglio Fowler LP)
Total Amount of Investment Sales & Leasing Transactions: $7.6 billion
2000 Post Oak Blvd., Suite 2000
Houston, TX 77056Phone: (713) 852-3500
Web site: www.hfflp.com
John H. Pelusi Jr., Executive Managing Director/Managing Member; Mark D. Gibson, Executive Managing Director; John P. Fowler, Executive Managing Director
- Lee & Associates
Total Amount of Investment Sales & Leasing Transactions: $7 billion
3991 MacArthur Blvd., Suite 100
Newport Beach, CA 92660Phone: (909) 241-7904
Web site: www.lee-associates.com
Bill Lee, Founder; Steve Jehorek, Chair
- Transwestern Commercial Services
Total Amount of Investment Sales & Leasing Transactions: $6.4 billion
1900 W. Loop South, Suite 1300
Houston, TX 77027Phone: (713) 270-7700
Web site: www.transwestern.net
Robert Duncan, Chairman; Larry P. Heard, President/CEO; Mark Doran, COO
- Century 21 Real Estate LLC
Total Amount of Investment Sales & Leasing Transactions: $5.5 billion
1 Campus Dr.
Parsippany, NJ 07054Phone: (877) 221-2765
Email: [email protected]
Web site: www.century21.com
Tom Kunz, President/CEO; Jacob Stepan, COO; John Greenleaf, SVP, Marketing
- Voit Commercial Brokerage
Total Amount of Investment Sales & Leasing Transactions: $3.8 billion
21700 Oxnard St., Suite 350
Woodland Hills, CA 91367Phone: (714) 978-7880
Email: [email protected]
Robert D. Voit, President, The Voit Cos.; David Allison, EVP & COO, The Voit Cos.; Robin Rousselet, CFO, The Voit Cos.
- Duke Realty Corp.
Total Amount of Investment Sales & Leasing Transactions: $2.6 billion
600 E. 96th St., Suite 100
Indianapolis, IN 46240Phone: (317) 808-6000
Email: [email protected]
Web site: www.dukerealty.com
Dennis D. Oklak, Chairman/CEO; Matthew Cohoat, EVP/CFO; Robert Chapman, SEVP, Head of Real Estate Operations
- Molinaro Koger
Total Amount of Investment Sales & Leasing Transactions: $2.2 billion
1676 International Dr., Suite 575
McLean, VA 22102Phone: (703) 760-9600
Email: [email protected]
Web site: www.mkhotels.com
Robert Koger, President; Ed Blum, Managing Director, Capital Markets; Eric Kudlak, Managing Director, Europe